Lakshmi Machine Works hosted a conference call on Feb 13, 2024. In the conference call the company was represented by V Senthil,   Chief Financial Officer, and   B. Dhanalakshmi, Senior General Manager.

Key takeaways of the call

Revenue mix (segment wise) for Q3FY24 is Textile Machinery Division [ 65% domestic; 21% exports; 14% spares], Machine Tools Division [97% domestic] and ATC [97% is exports]. 

TMD order book is Rs 4000 crore and of which the active orders are of about 76% (or Rs 3050 crore) and in-active order book is about 23-24% (or Rs 900-1000 crore).  Of the domestic order book 50% is project orders and balance 50% is for unitary machines.  LMW Global order book is Rs 60 crore and that of LMW China is Rs 41 crore.

TMD - Over the period of last 3 quarters, have seen a slight dip in the order book with textile industry have very challenging time.  There seems to be a slight revival at this moment with respect to the capacity utilization at the customers’ end and also some exports are going a little bit better. However, the company is not seeing any immediate light in terms of order recoveries.    Can’t give  clear revenue visibility as the market continue to be challenging but the outlook is little bit better over one month ago though the time frame is small considering the current yarn and cotton prices.

ATC – This division manufactures components such as engine parts and other body parts for various aircraft manufacturers. The ATC Business is split into two parts i.e. metallics (90% exports; 10% domestic) and composites. Considering the current ATC order book the company could deliver a revenue of Rs 600 crore over next 3-4 years without any addition of fresh orders.

STO of Machine Tools Division for 9mFY24 is flat and the issue impacting it is temporary in nature.   The company is invested as far as MTD is concerned and have enough capacity for growth. The lower end of margin is largely due to less than optimum capacity utilization. Typically the company works with 1.5 month order book and the company working to improve the sales volume to drive profitability.

LMW China revenue is Rs 18 crore. For 3 years we could not get into china due to covid. Starting Feb 2023 the company could send its team. No full-fledged team for 3 years and this scaled down the business but the team is ramping up the business.

Exports – Bangladesh has changed the EXIM policy and now export of garments incentives has removed irrespective of domestic yarn or imported yarn.